“This upcoming budget will be pivotal in charting the country’s future”
NASSAU, BAHAMAS — The opposition said yesterday that the country’s gross domestic product (GDP) contraction in 2020 is “alarming and troubling but not surprising”, adding that this upcoming budget will be pivotal in charting the country’s future.
Exumas and Ragged Island MP and Shadow Finance Minister Chester Cooper said in a statement yesterday on the release of the estimates of the economy’s performance in 2020: “There is no getting around how serious this situation is.
“A GDP contraction by 25 percent in nominal terms, and nearly 15 percent in real terms and is dramatic and severe. This reduction in the size of the economy is alarming and troubling but not surprising.”
He added: “More concerning is our estimation that the level of contraction will be revised to show it is actually starker than 24.7 percent, once validated by data from VAT (value-added tax). As a primary source of reliable data, we expect that it will be impacted adversely by poor compliance by taxpayers. This continued poor tax compliance is a direct result of the gutting of the Revenue Enhancement Unit.
“The absence of a robust economic growth plan at the outset of this administration’s term in office, coupled with the need to balance the budget on an unrealistic timeline without accounting for global shocks, has done real but unnecessary harm to our economy.
“However, using the numbers released for analysis shows that we are in a frightening place.”
According to Cooper, with $9.5 billion in direct debt at the nine-month mark, according to the fiscal snapshot, “we are certain to see a forecasted debt-to-GDP ratio of well over 100 percent for this fiscal year when the budget communication is delivered”.
“We note that the approved forecast for the entire year was $9.5 billion,” Cooper said.
He added: “This upcoming budget will be pivotal in charting the country’s future as a recovery to pre-pandemic GDP levels would not be automatic or instantaneous. We have billions of dollars due in the next few years for foreign currency loans, without any apparent repayment strategy other than ‘hope for the best’.
“Apologists for this administration will likely point to a global reduction in GDP and the effects of the pandemic on world trade and tourism. While there is no doubt that the pandemic is at the root of our economic contraction, the fact that poor management on the part of the government made things worse.”
